Mortgage lender Nationwide just revealed that it’s going to get even more painful when it comes to buying a property in Britain’s capital.
The average price for a property in Britain now stands a £195,585.
However, the price for a London home is now more than double the national average at £443,399 and more than three and a half times higher than the cheapest prices in the UK.
“Indeed, the capital has continued to see price growth at or above the rate in the UK overall over the past four quarters,” said Robert Gardner, Nationwide’s Chief Economist in a statement.
“The annual rate of price growth in London is currently the highest in the country and actually accelerated to 10.6% in Q3, up from 7.3% in Q2. The gap between London house prices and the rest of the UK has continued to reach new highs.”
UK interest rates have remained at a record low of 0.5% since early 2009 which has made borrowing cheaper and therefore have allowed more people to get on the property ladder and afford mortgage payments.
On top of that, the Conservative-led government launched the Help to Buy scheme which allows people to buy a property with only a 5% deposit. The government then bolsters the deposit by an extra 15%. The Tories also abolished the old stamp duty system last year which led to people saving thousands of pounds in tax payments when they purchased a property.
For all these reasons, coupled with the severe housing shortage, prices are still significantly higher than what they were before the credit crisis – even if month-to-month growth has slowed somewhat.
“UK house prices increased by 0.5% in September, with the annual pace of house price growth picking up modestly to 3.8%, from 3.2% in August,” said Gardner.
“The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.
“Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead.”
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